Don't forget nursing home expenses or the fag end of life medical care. It's 
frikking expensive and eyewateringly big. 

On 16 Sep 2016, at 11:37, Deepak Shenoy <> wrote:

>> Hypothetically, say that translates into 25K + 5K + 5K + 5K= 40K per month.
>> Need to have a corpus that gives you this monthly amount with even
>> conservative investments such as FDs. We're talking about a 8-10% ROI per
>> annum. So, in this example, you need to have a corpus of 50 - 55 lakhs. If
>> you have a good financial planner and a higher risk appetite, your returns
>> can be higher. Hope this helps.
> You will need a lot more. So I have this post: how much FY money do you
> need?
> and then I have this thingy:
> What you need is a lot more because
> a) inflation is much bigger than 5K
> b) you need to plan to live to age 90. Just because.
> Now I assume you're the only person in your household with revenue, so you
> may have to plan cash flow for say 50 years.
> You need money that gets you this 8% return and yet, lasts you all the way
> for 50 years. How much do you need?
> The Answer is about Rs. 1.22 crores. (Assumptions: you get 8% on your
> money, you spend 40K a month now, inflation is 5% a year).
> The way it works is
> Year 1 you have 1.22 cr. on which you make, at 8%, about 9.75 lakh, or
> which you spend 4.8 lakh, and the rest stays in your capital which goes up
> to 1.27 cr.
> Year 2 you have 1.27 cr. on which you make, 10.16 lakh, you spend 5.04 lakh
> (remember, 6% inflation) and your capital goes up to 1.32 cr
> and so on
> your capital keeps going up for 35 years, till you have about 3.2 cr. and
> in the last 15 years, it will plummet to zero (in the 50th year from now)
> This capital also acts as an emergency buffer.
> I know there are variables, so you can calculate different ways to get
> there - perhaps you sell your house when your daughter's 18 and then move
> to a smaller place. Maybe you reverse mortgage the house when you're 60 to
> get some money from a bank. Etc. I had a calculator on how much you need,
> it's at
> Now, here's the other thing. If you're planning to build cash flow, don't
> use FDs. They create taxable income and at large corpuses become very
> unwieldy. THere are other instruments - I can give you more details if you
> want to explore. These will both save you tax and perhaps create a "kicker"
> income if rates continue to fall (a key risk here - imagine the person who
> did this calculation in 1980 in the US - interest rates of 12% - and today
> the FD rates are like 0.5%)
> Don't worry if you don't have this kind of money right now - there are
> not-so-difficult ways to get there if you plan it a little more. You don't
> want a precise plan - you need lots of buffers - but you need an idea that
> this takes me to age 90. The big thing I would imagine you haven't
> considered is that your child will need a lot more money as she grows up
> and that you will need a lot more money for travel which I'm thinking is a
> good part of your bucket list.

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